Michigan Health Plan Tax Lawsuit Tests Business Community Priorities

Michigan Health Plan Tax Lawsuit Tests Business Community Priorities

A lawsuit filed last week in Federal Court seeking a declaration that Michigan’s Health Insurance Claims Assessment Act is preempted by the Employee Retirement Income Security Act (ERISA) will certainly test existing legal precedent, but perhaps the more interesting test will be how the business community responds.

This blog previously reported that officials from one prominent business organization in the state had no intention of pushing back against the legislation at the time citing both internal and external political concerns. That said, they suggested that there would likely be “private” support of a legal challenge from within their organization if in fact the law was challenged.

It will be interesting to see how this “leading from behind” approach plays out. In a conversation with my source shortly before the lawsuit was filed, it was noted that Michigan self-insured employers are now starting to pay more attention to the law and what it means to them.

More specifically, this blog has learned that one prominent multi-state self-insured employer based in Michigan calculated its yearly projected expenses to comply with new law to be more than $250,000. Of course, the administrative headaches are just a bonus.

But even with such a direct adverse impact on their company, senior company executives remain guarded about expressing opposition to the new law.

Now that the legal flaws of new law have been laid bare in the detailed complaint filed against the state and word is starting to get out about its practical impact, we’ll see if any heads pop up out of the foxholes.

And while the this legal challenge is important to self-insured employers in Michigan and to other entities that pay healthclaims for Michigan residents for services received within the state, its significance extends more broadly.

Michigan is not the only state that is strapped for cash and looking for new revenue streams. If its new health plan tax law goes unchallenged, this will likely embolden other states to consider this same approach and the cornerstone of ERISA preemption will be greatly compromised, and with it, the viability of self-insured health plans.

I suspect that if Michigan self-insured employers in large numbers estimated the financial impact to their balance sheets if they were forced to switch to fully-insured health plans and publicly communicated this to policy-makers and business association leaders early on this train would have been pulled off the track before arriving at the courthouse door.

The state has declined to comment on the lawsuit thus far but is required to file a formal legal response in the next 30 days so it will soon become clear how they intend to fight this challenge.

Perhaps the business community may yet demonstrate some clarity with regard to where it stands.
A Tale of Two Domiciles...Revisted

A Tale of Two Domiciles...Revisted

We suggested a narrative earlier this year that two southern captive insurance domiciles would be worth watching to compare and contrast based on insurance commissioner appointments in each state. Let’s review.

The captive industry in South Carolina fell on hard times during the regime of Insurance Commissioner Scott Richardson who left office at the end of 2010. When newly-elected Governor Nikki Haley named David Black as his replacement in February, this blog reflected the puzzlement expressed by many industry and political insiders.

Mr. Black was a largely unknown quantity aside from being the CEO of an inconsequential life insurance company.

But the sparse resume and lack of ART industry credentials didn’t deter Governor Haley from appointing Mr. Black and pronouncing him as a savior. Consider her comments when naming him to the position where she said “Understanding the importance of your industry, I chose David Black to lead the Department of Insurance. He has the energy and capability to revitalize the captive industry for our state.”

As it turned out, he had neither

Earlier this week, Mr. Black abruptly announced his resignation to his staff via e-mail giving no specific reason for his decision.

So now Governor Haley has a chance for a second bite of the apple to get it right. This means naming someone to the position who is willing and capable to shake up the bureaucracy within the department and establish a firewall between the regulation of traditional insurance companies and alternative risk transfer programs, as originally envisioned by former commissioner Ernie Csiszar more than a decade ago.

A tall order for sure and we’ll be watching.

A very different story continues to play out in nearby Tennessee where Governor Bill Haslam tapped Julie Mix McPeak to head up the insurance department in that state.

This blog noted that Ms. McPeak had both the credentials and reputation to turn heads within the ART marketplace when word of her appointment surfaced. But her future success was not assured.

The first order of business as it related to the ART industry was to shepherd a bill through the Legislature that made comprehensive updates to the state’s captive statute. This effort proved more difficult than expected but Ms. McPeak was up to the task and that legislation, which she helped draft, was signed into law.

Since that development, she has been working methodically to assemble a top notch regulatory team and now most of the key positions have been filled and she introduced these individuals at an industry event earlier this month.

So armed with a progressive captive stature and a regulatory team inspired to transform Tennessee into a premiere captive insurance domicile, the stage has now been set for her to make it happen.

But let’s not get ahead of ourselves as there are certain to be pitfalls ahead as the domicile finds its footing under Ms. McPeak’s leadership in 2012. That said, the fact that leadership is on display is certainly refreshing for those vested in the growth of the ART marketplace.

This tale of two domiciles will continue.
Lynnwood auto repair shop charged with insurance fraud

Lynnwood auto repair shop charged with insurance fraud

A Snohomish County auto repair shop has been charged with insurance fraud after charging for repairs it didn't do and parts that it never installed.

Northwestern Collision, of Lynnwood, was charged Dec. 14 in Snohomish County Superior Court. Arraignment is set for Jan. 9.

In 2009, Farmers Insurance investigators inspected 11 vehicles that had been repaired by the shop between 2007 and 2009. Of the 11, 10 "had substantial and specific" deviations from the repair estimates that Farmers had agreed to.

Among the problems: parts missing and not replaced, repairs not performed, and repairing items that were supposed to be replaced.

On Dec. 8, 2010, officers from the state insurance commissioner's Special Investigations Unit, the State Patrol and the Snohomish County Sheriff's Office served a warrant at the company's Lynnwood office. They gathered up paper files on 10 of the 11 vehicles.

The records indicated that in some cases, new parts that were supposed to be installed were instead returned to the parts dealer.

The insurer was overcharged nearly $11,000, and had to buy one customer's car, which had been rendered unsafe to drive, for another $15,446.
Cease and desist order issued to TracGuard Services

Cease and desist order issued to TracGuard Services

The Washington state insurance commissioner's office has told a Florida-based vehicle service contract provider to stop selling unauthorized contracts in Washington state.

TracGuard Services LLC, Jose L. Terry and Alberto Tudela, all of North Miami, have been ordered "to immediately cease and desist from engaging in or transacting the unauthorized business of insurance" in Washington.

Neither the company nor the two men are authorized to solicit or transact insurance in the state. They have not registered as a motor vechicle service contract provider in Washington.

The three have been ordered to notify all Washington residents who have purchased a service contract from them. It also warns that, pursuant to Washington state law, unauthorized insurers "shall remain personally liable for performance of the contract."
Cease and desist order issued to Mill Creek man

Cease and desist order issued to Mill Creek man

A Mill Creek man and company have been ordered to stop selling unauthorized vehicle service contracts.

The order names Scott L. Stevens and RVProtection.net, Inc., both of Mill Creek, Wash. In August of 2010, they sold a consumer a vehicle service contract offered by Genuine Warranty Solutions, Inc.

The problem: Genuine Warranty Solutions, Inc. is not a registered vehicle service contract provider in Washington.

The Dec. 19 order took effect immediately. Stevens and the company have the right to appeal the order.
Public notices and hearings: Change of incorporation, proposed acquisition, etc.

Public notices and hearings: Change of incorporation, proposed acquisition, etc.

Notices and upcoming hearings from our public notices web page:

Proposed acquisition: Humana is proposing to become the sole owner of Arcadian Management Services and its affiliates. We've completed our review of the application for acquisition of control. No hearing's been scheduled yet, but will be soon.

Incorporation change: The Safeco Companies have requested approval to have New Hampshire be their state of incorporation. The companies, which were acquired by Boston-based Liberty Mutual in 2008, say the change would not affect any Washington policyholders, and that there would be no interruption in coverage. A hearing is scheduled for Jan. 10, 2012 at 10 a.m. in our Tumwater office, which is at 5000 Capitol Blvd. Annual reports and other documents re: the request are posted here.

Change in port of entry/redomestication: Industrial Alliance Pacific Insurance and Financial Services have filed documents to change their port of entry/redomestication to Texas. A hearing is scheduled for Feb. 1, 2012 at 1 p.m. at our Tumwater office, which is at 5000 Capitol Blvd. Documents re: the request are posted here.
Judge issues insurance fraud ruling...in the form of a poem

Judge issues insurance fraud ruling...in the form of a poem

And now for something completely different:

A Pennsylvania judge has issued a ruling in an insurance fraud case. What's unusual is that the judge issued his ruling in the form of a poem. From the Associated Press:
Justice J. Michael Eakin, writing for a 4-2 majority, concluded in six-line stanzas that a man's attempt to deposit a forged check appearing to be from State Farm didn't constitute insurance fraud.
"Sentenced on the other crimes, he surely won't go free, but we find he can't be guilty of this final felony," Eakin wrote. "Convictions for the forgery and theft are approbated — the sentence for insurance fraud, however, is vacated. The case must be remanded for resentencing, we find, so the trial judge may impose the result he originally had in mind."
A 3-page dissent by another judge, AP writer Marc Levy noted, did not rhyme.
GEICO fined $100,000 for overcharging customers in WA; company will also refund $7.5 million

GEICO fined $100,000 for overcharging customers in WA; company will also refund $7.5 million

A Maryland-based insurance company has been fined $100,000 after overcharging thousands of its Washington state customers.
The insurer, GEICO, is also refunding $7.5 million – plus 8 percent interest -- to the 25,267 affected auto insurance consumers by the end of the year.

“A computer database error caused the problem, which the company reported to us promptly,” said Washington State Insurance Commissioner Mike Kreidler. “GEICO has also agreed to a two-year compliance plan that includes multiple audits.”

An additional $50,000 fine was suspended, on the condition that the company abides by the terms of the compliance plan.

The refunds, many of which have already been paid, will average roughly $300. The company has been contacting active and former customers affected by the issue and expects to have all refunds paid by the end of the year.

On May 26, 2011, GEICO representatives self-reported the computer error, which resulted in 7 percent of the company’s Washington customers being overcharged for insurance between Aug. 24, 2009 and June 2011.

Fines collected by the insurance commissioner’s office do not go to the agency. The money is deposited in the state’s general fund to pay for other state services.

The complete order is posted at: http://www.insurance.wa.gov/oicfiles/orders/2011orders/11-0273.pdf.
Summary Judgment - Oral Evidence

Summary Judgment - Oral Evidence

In this post, we continue our discussion of the Court of Appeal's decision in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764.

Rule 20.04(2.2) permits a judge to hear oral evidence on a summary judgment motion. The Court provided guidance on when this discretion may be exercised.

The Court held that a party that moves for summary judgment must be in a position to present a case capable of being decided on a paper record. The motions judge can decide if he or she requires viva voce evidence under r. 20.04(2.2). The purpose of the rule is not to allow a party to enhance the record it has put before the court.

An order for oral evidence will generally be appropriate where the judge concludes the exercise of powers under r. 20.04(2.1) will be facilitated by hearing oral evidence of a limited number of witnesses on one or more specific, discrete and likely determinative issues.

An order under r. 20.04(2.2) may be appropriate where:

(1) Oral evidence can be obtained from a small number of witnesses and gathered in a manageable period of time;
(2) Any issue to be dealt with by presenting oral evidence is likely to have a
significant impact on whether the summary judgment motion is granted; and
(3) Any such issue is narrow and discrete – i.e., the issue can be separately decided and is not enmeshed with other issues on the motion.

- Tara Pollitt
Social media, liability and insurance

Social media, liability and insurance

Social media and insurance? Hard to imagine those words together, but the new report by the Insurance Information Institute is pretty interesting reading.

Most of us rely on social media more and more these days - whether for work or to keep with friends and family. But we probably never think about the insurance impact (ie. liability issues).

Find out if you or your business could be at risk - here's the report.
Court of Appeal comments on the new summary judgment rule

Court of Appeal comments on the new summary judgment rule

The Court of Appeal has now released its decision regarding the new summary judgment rule. The appeal was heard before a five panel Court and pertained to five action. It is released under the name Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764.

The Court held that there are three types of cases that are amenable to summary judgment:

1. Where the parties agree it is appropriate to determine an action by way of summary judgment (para. 41);
2. Claims or defences that are shown to have no merit (para. 42); and
3. Where the trial process is not required in the interest of justice (para. 44).

It is not necessary for the judge to categorize the type of of case in question. In fact, the Court held that the latter two types of cases are not to be viewed as discrete compartments.

The test for summary judgment is the "full appreciation test". The motions judge must ask "can the full appreciation of the evidence and issues that is required to make dispositive findings be
achieved by way of summary judgment, or can this full appreciation only be achieved by
way of a trial?" (para. 50). In cases that call for multiple findings of facts emanating from a number of witnesses and found in a voluminous record, summary judgment is not a substitute for the trial process. On the other hand, the full appreciation test may be met in document-driven cases with limited testimonial evidence, cases with limited contentious factual issues or where the record can be supplemented to the requisite degree at the motion judge's direction by hearing oral evidence on discrete issues.

It remains to be seen how this will impact summary judgment motions going forward. Are judges going to be more reluctant to grant summary judgment?

- Tara Pollitt
Number of uninsured in WA hits 1 million

Number of uninsured in WA hits 1 million

We posted a report this morning detailing our estimates of the number of Washingtonians with no health insurance, the amount of uncompensated care, and how those numbers are trending.

The upshot: We calculate that:
  • The number of uninsured has reached 1 million, or 14.5 percent of the state's population.
  • Uncompensated care (bad debt and charity care at hospitals, clinics, etc.) is nearly $1 billion.
  • And that both numbers are likely to continue to rise until 2014, when the major provisions of federal health care reform are slated to take effect.
  • The percentage of residents without health coverage worsened in 31 of 39 counties.
  • In several counties, more than 1 in 5 residents has no health coverage.
“This is a grim milestone for the state, and we believe the situation will remain bleak for two more years,” said Kreidler. “But it’s important for people to know that there is hope is on the horizon.”

Counties with a particularly high percentage of uninsured residents include: Adams, Grant, Okanogan, Franklin and Yakima. But the problem also worsened in King, Pierce, Snohomish and Spokane counties.

The good news: Assuming that federal health care reform takes effect as planned, more than 800,000 uninsured Washingtonians will be eligible in 2014 for expanded Medicaid eligibility or subsidies to help low- and middle-income families pay for health coverage.

This is the third report on the uninsured our office has put out since 2006.
A $200,000 patio cover? Spokane man charged with insurance fraud

A $200,000 patio cover? Spokane man charged with insurance fraud

A Spokane man has been charged with insurance fraud and attempted theft after a snow-damaged patio cover worth about $4,000 mushroomed into a nearly $200,000 claim.

Keith R. Scribner, 47, was arraigned Monday in Spokane County Superior Court on one count of insurance fraud and one count of attempted theft.

In late July 2009, Scribner's mother, Marilyn Warsinske, filed a claim with Liberty Mutual insurance. She said a patio roof at a home she'd purchased had collapsed due to the weight of snow some 6 months earlier. The policy covered "like kind and quality" replacement. Her son, she told the company, would handle the claim.

Scribner told the insurance company that patio cover was an extensive structure, spanning the entire length of the patio and wrapping around the home's chimney. Claims officials, inspecting the site, wondered why was there no flashing or holes in the masonry. Scribner said that house painters must have made repairs.

He sent the insurance company three bids to replace the cover based on his description. The bids ranged from $195,586 to $213,815.

Claims officials asked Scribner for any photos of the roof prior to the damage or after it collapsed. Perhaps some were taken during a home appraisal prior to the purchase, they suggested. Scribner said there were no photos and was no appraisal.

But a claims handler discovered an aerial photo of the home on a real estate website. It showed a much smaller patio cover than Scribner claimed.

The company launched a fraud investigation and notified Insurance Commissioner Mike Kreidler's anti-fraud Special Investigations Unit.

As it turned out, there had been a home appraisal, the investigators discovered. In fact, Keith Scribner met with the appraiser. And the appraisal included photos of the patio cover. A real estate agent interviewed by investigators described the cover as being "small and nothing special or significant."

The home's previous owner also provided photographs of the structure. It was originally canvas. When that because troublesome to remove each year, the homeowner bought a polycarbonate cover. Cost: About $300.

An architect told a state fraud investigator that he'd met with Scribner in 2008 -- months before the snow collapse -- to discuss plans to replace the deck cover with new, larger one.

A local company, provided with measurements and photographs of the original structure, drew up replacement bids at the request of a state fraud investigator. The bids: $3,913 and $4,782.
Insurance problem? We can help

Insurance problem? We can help

We're the state agency that regulates insurance in Washington state. If you're a Washingtonian, we're happy to help answer insurance questions and help try to solve problems with insurers/agents/etc.

What can you expect? If you file a complaint, for example, we will:

■ Contact the insurance company regarding your concerns, review their response, and share the results of our review with you.

■ Research and complete your complaint within 60 days.

■ Suggest steps you might take to resolve your issue.

■ Make your complaint a part of the company's public record.

■ Require the company to address your concerns and follow Washington state insurance laws and regulations.

And we get results. We get millions of dollars a year in delayed or denied claims paid to Washington consumers.

For a complete list of our customer service standards -- as well as links to easily file a complaint online -- please see our complaint help web page. You can also call our Insurance Consumer Hotline toll-free at 1-800-562-6900.

We'll try our best to help.
Occupier’s Liability S.4(4)(f): Recreational Trail

Occupier’s Liability S.4(4)(f): Recreational Trail

In Turner v. Kitchener (City) [2011] O.J. No. 4803, the plaintiff was riding his bike along a recreational trail in Kitchener. It was his regular route and time of travel which put him on the trail at 5:15 am.

Earlier that day vandals had set fire to a bridge along the trail and after investigating, the police and fire personnel had blocked off the bridge with a wooden barricade and yellow caution tape.

The plaintiff was biking at a relatively high speed for the time of morning, was wearing a helmet but did not have any light affixed to his bike. As the plaintiff approached the barricade, he was not able to see it, and when he did notice it is was too late to stop safely. The plaintiff applied his brakes so hard that he flipped over the bike and suffered injuries.

In this case, the plaintiff must establish that the defendant acted with “reckless disregard” towards him.

The trail is a “recreational trail”, so that s.4(4)(f) of the Occupier’s Liability Act (“Act”) was triggered. Section 4(3)(c) of the Act is also triggered and the plaintiff is deemed to have willingly assumed all risks when he rode his bike on the trail that day.

The deputy trial judge cited Cormack v. Mara (Township) (1989), 68 O.R. (2d) 716 (C.A.) which defined “reckless disregard” as doing or omitting to do something which the occupier “should recognize as likely to cause damage or injury to [the person] present on his or her premises, not caring whether such damage or injury results”.

After the fire, police and fire personnel attended the scene the city dispatched a crew to erect an orange barrier with several lines of yellow caution tape blocking off bridge access. The bridge was blocked off in order to arrange an inspection to determine if the bridge was structurally safe.

The plaintiff’s expert report concluded that the city ought to have used either a reflective warning sign and/or a flashing beacon.

The city offered evidence that the recreational trails are closed between 11pm and 6am. There are signs posted which state this and there is a by-law which specifically prohibits presence in the park, including on the trails between those hours.

The deputy judge accepted the city’s evidence, although it only showed that the plaintiff was in violation of a city by-law. He held that the city did not act with “reckless disregard” for the plaintiff. The deputy judge further explained that,“it could not be deemed likely, from the city’s perspective, that a bicyclist riding a trail while it was closed, and more importantly, while it was almost completely dark, without a headlight, would fail to see the barricade until it was too late to stop safely. Nor do I find that the city did not care whether injury resulted from its erection of the barricade.”

The deputy judge also stated that a flashing light on the barricade would have increased the possibility of the plaintiff seeing the barrier, but that a light on his bike and riding at a slower speed in the dark would have done the same thing.

If the deputy judge had found for the plaintiff on liability, he would have reduced the damages by a factor of 70%.

Also see Kennedy v. London (City) (2009), 58 M.P.L.R. (4th) 244 (Ont S.C.J.) and Schneider v. St. Clair Region Conservation Authority (2009), 97 O.R. (3d) 81 (C.A.) on the issue of recreational trails.

- Alison McBurney
Medicare drug and Advantage plan enrollment ends Dec. 7

Medicare drug and Advantage plan enrollment ends Dec. 7

Medicare's open enrollment for prescription drug plans (Part D) and Medicare Advantage plans ends Dec. 7.

This year's enrollment period was moved and expanded, thanks to the Affordable Care Act, giving people additional time to consider their choices.

Still need to make a decision and need some help? Our Statewide Health Insurance Benefit Advisors (SHIBA) program can answer questions and help you evaluate plans. Call our Insurance Consumer Hotline at 1-800-562-6900 and ask to make an appointment with a SHIBA volunteer in your area.

Before you make your decision, consider these tips:

  • Plan costs and coverage can change every year, so carefully review all letters and notices from your current plan.

  • Make a list of all current prescription drugs you take, the doses, and how often. Then, use the Plan Finder at www.medicare.gov to compare Part D plans.

  • Review the 2012 Medicare & You handbook. You should have received it in September.
    If you have questions, call 1-800- MEDICARE (1-800-633-4227) before you sign up.

  • If you have limited income and need help paying for prescription drugs, check out Medicare’s “Extra Help” program. To see if you qualify, contact the Social Security Administration at 1-800-772-1213 or go to www.socialsecurity.gov and click on Medicare.
But most importantly, don't wait! Remember, open enrollment ends Dec. 7. Here's a list of prescription drug plans and Medicare Advantage plans
Insurance when you're laid off: What to ask for on your way out the door

Insurance when you're laid off: What to ask for on your way out the door

Nobody wants a layoff notice, but critical insurance moves on your way out the door can help extend your health insurance (and other coverage) and save you thousands of dollars at a critical time.

Insurance.com spelled this out today in an article titled "Insurance smarts during a layoff: 3 must-do moves."

Among the advice:
  • Ask for an extension of health care benefits. Ask for the employer to keep you covered for 3-6 months.
  • Negotiate with your employer to have them pay COBRA insurance premiums, which can be very expensive.
  • Convert group life insurance or group disability coverage to an individual plan, particularly if you're older.
Report: Health costs' rapid rise

Report: Health costs' rapid rise

The Commonwealth Fund has published a new report looking at state trends in health insurance premiums and deductibles from 2003 to 2010.

The upshot: employees' annual share of premiums increased by 63 percent over those 7 years (and premiums themselves rose 50 percent as well). In Washington state, for example, family health insurance premiums rose from $9,212 to $14,188 during that period. That's a 54 percent increase.

Not surprisingly, given stagnant incomes in recent years, premiums as a percentage of median household income during that time increased dramatically. In 2003, only a single state (West Virginia) had average premiums above 20 percent of median household income. Today, about half the states are in that category.

For a look at premiums (single and family) by state, here's a good interactive map from the report.

The report continues:
 At the same time, per-person deductibles doubled in large, as well as small, firms.
If premium trends continued at that rate, the researchers predicted, "the average premium for family coverage will rise 72 percent by 2020, to nearly $24,000."

Federal health care reform, passed in early 2010 but taking effect largely in 2014, offers the hope of some savings, the report says:
Health reform offers the potential to reduce insurance cost growth while improving financial protections. If efforts succeed in slowing annual premium growth by 1 percentage point, by 2020 employers and families together would save $2,161 annually for family coverage, compared with projected premiums at historical rates of increase.
Admissibility of Expert Reports in Small Claims Court

Admissibility of Expert Reports in Small Claims Court

In Turner v. Kitchener (City) [2011] O.J. No. 4803, there was a mid-trial ruling on the admissibility of an expert report in Small Claims Court.

The facts of this case involve a plaintiff who was riding his bike along a recreational trail in Kitchener. It was his regular route and time of travel which put him on the trail at 5:15 am.

Earlier that morning vandals had set fire to a bridge along the trail and after investigating, the police and fire personnel had blocked off the bridge with a wooden barricade and yellow caution tape.

The plaintiff was biking at a relatively high speed for the time of morning, was wearing a helmet but did not have any light affixed to his bike. As the plaintiff approached the barricade, he was not able to see it, and when he did notice it is was too late to stop safely. The plaintiff applied his brakes so hard that he flipped over the bike and suffered injuries.

At trial, the plaintiff attempted to admit into evidence a report from a professional engineer. Defence counsel objected and intended to cross-examine the expert and challenge the admissibility of his report based on the evidence of qualifications.

The deputy trial judge held that the report was admissible. He cited section
27(1) of the Courts of Justice Act which provides the Small Claims Court (“SCC”) with the general authority to “accept and act on lower-quality evidence than would otherwise be permitted under the common law rules of evidence”.

He then examined the SCC Rule 18.02 subsections (1) to (7) and held that the position of defence counsel as he intended to cross-examine the expert is not contemplated by the Rules and that the report had already been admitted into evidence by way of Rule 18.02 (1) to (3). Admissibility of documents under Rule 18.02 is to be determined at the initial stage under Rule 18.02(1) when the document is tendered - “Once the document is admitted, the witness may be-cross-examined using the summons procedure under rule 18.02(4). But since that is cross-examination,the rule presupposes that the report or document is already admitted into evidence. The report or document serves as the examination-in-chief of that

The deputy judge found no merit in the defendant’s objection to the expert’s qualifications. The expert was a professional engineer and his qualifications to provide the opinion evidence were of the highest quality generally seen in civil courts.

- Alison McBurney
Commissioner Kreidler on health care reform, the individual mandate, and rate transparency

Commissioner Kreidler on health care reform, the individual mandate, and rate transparency

Commissioner Kreidler was interviewed by host Austin Jenkins on TVW's Inside Olympia program this morning to discuss health care reform, health insurance costs, and his successful push to release confidential rate information from health insurers.

On the federal Affordable Care Act: "While this act is not perfect, it is the best thing that we have going right now to get our hands around a very serious problem for this country of ours...People are really being hurt...The current system is broken."

On the individual mandate to buy health coverage, starting in 2014: "If you have people opting in when they're sick and out when they're well, it just plain won't work."

On health care exchanges: "It's going to be a lot like online shopping that a lot of people are familiar with. And that's going to be a huge advantage over what we have now."

Additional flood warnings in WA

Additional flood warnings in WA

After overnight rain in parts of the state, the National Weather Service has issued another flood warning, including:

The Nooksack River at North Cedarville (Whatcom County)
The North Fork of the Stillaguamish near Arlington (Snohomish County)
The Deschutes near Rainier (Thurston County)
The Chehalis at Porter (Grays Harbor County)

Minor flooding is expected at some of those locations today or tonight. The Chehalis River at Porter was close to flood stage at 8:45 this morning.

See the link above for details.

Update: (11:41 a.m.) Another warning's been issued, including some other area rivers. The upper reaches of most rivers crested this morning or will crest this afternoon, with crests moving downstream through Thursday.
OPCF 44R - Family Protection Endorsement

OPCF 44R - Family Protection Endorsement

The Court of Appeal recently affirmed a lower court decision on the OPCF44R.

In Van Bastelaar v. Bentley, [2011] O.J. No. 4666 (C.A.), the plaintiffs were concerned that the defendant's $1,000,000 policy would be apportioned between four injured parties and there would be a shortfall. As a result, they added their own insurer pursuant to the inadequately insured motorist provisions of their policy. Their policy had a Family Protection Endorsement with limits of $1,000,000. The key provision read as follows:

The insurer's maximum liability under this change form, regardless of the number of eligible claimants or insured persons injured or killed or the number of automobiles insured under the Policy, is the amount by which the limit of family protection coverage exceeds the total of all limits of motor vehicle liability insurance, or bonds, or cash deposits, or other financial guarantees as required by law in lieu of such insurance, of the inadequately insured motorist and of any person any person jointly liable with that motorist.

The motions judge held that "An underinsurer's obligation to pay does not arise until the total amount of insurance held by the tortfeasor at the moment of the accident is less than the family protection coverage liability limit." He concluded that since "the policies of the parties are unevenly matched, so therefore, the underinsurer had no exposure to liability".

The Court of Appeal affirmed the decision.

- Tara Pollitt
Flood warning issued for parts of Lewis, Thurston, Pierce counties

Flood warning issued for parts of Lewis, Thurston, Pierce counties

The National Weather Service has issued a flood warning for the:
  • Newaukum River near Chehalis (reaching flood stage this evening, continuing through Weds night or Thursday)
  • Chehalis River near Doty (this evening)
  • Chehalis River at Centralia (late tonight)
  • and the Chehalis River near Grand Mound. (late tonight)
"Minor to moderate flooding is expected along the Chehalis and Newaukum Rivers beginning this evening," the weather service says.

In addition, a flood watch remains in effect for the lower reach of the Chehalis River in Grays Harbor County, where the NWS says flooding is possible starting late Wednesday.

Up to 4 inches of rain has fallen in the Chehalis River Basin during the past 24 hours. Another 2-5 inches is expected from now through Wednesday night. For more details, including specific roads and areas likely to flood, click the link above.

Here's the critical part, from our perspective: Flood damage is not covered under a standard homeowners insurance policy. If you want coverage against flooding -- and your lender may require it if you live in a flood-prone area -- you'll need to buy extra coverage.

For most homeowners, that means going to the National Flood Insurance Program, a federally run insurance plan that's sold by local agents. But the coverage takes 30 days before it goes into effect. Flood season is long in the Pacific Northwest. If you think you're at risk -- and see the red "One-stop flood risk profile" box check your flood risk and get an estimate of premiums -- definitely consider flood insurance. And don't delay.

Update: (12:02 p.m.) A new alert has been issued for minor flooding along the Puyallup River near Orting and the Deschutes River near Rainier.
Two warranty companies ordered to stop selling in Washington

Two warranty companies ordered to stop selling in Washington

We issued a cease and desist against Charter Warranty Services of Detroit, MI and TracGuard Services of North Miami, FL, ordering both to stop selling protection products in our state without a license.

Both companies were selling motor vehicle service contracts and protection products guarantees but had not registered with us. In Washington state, all motor vehicle service contract and protection product providers must register with our office.

If they fail to do so, they're required to get a certificate of authority to act as an insurer and get an agent or producer license in order to sell their products.

Don't recognize these two companies, but still wondering if you should get a warranty on your next big purchase? We can help. See if the company is registered before you buy a policy.

And consider these helpful tips on negotiating a price and what to ask before you buy.
Wind warning for tonight

Wind warning for tonight

The National Weather Service is predicting gusts of up to 60 miles per hour in parts of Washington state tonight, including San Juan County, western Whatcom County, western Skagit County and the Admiralty Inlet area.

The day after windstorms, we often get a wave of calls from people with toppled trees, debris-damaged cars, etc.

To help, we put together this list of typical questions, including:

Am I covered if my car was damaged by falling tree limbs?
My yard is covered with branches and debris. Will my insurer pay the cleanup costs?
My boat sank from strong winds. Am I covered?
My business' awning was damaged by the wind. Can I file a claim?

Be careful out there.
Sentencing this afternoon for insurance agent who stole $1 million from elderly clients

Sentencing this afternoon for insurance agent who stole $1 million from elderly clients

Former insurance agent Jasmine Jamrus-Kassim is scheduled to be sentenced later today for stealing more than $1 million in retirement savings from several elderly clients. Jamrus-Kassim pleaded guilty last month to 10 counts of first-degree theft.

The King County Prosecutors Office is seeking an exceptional prison sentence of 68 months. The case is State v. Jamrus-Kassim, with sentencing slated at 3:30 p.m. before Judge Sharon Armstrong in courtroom E-847.

From 2007 to late 2009, several of Jamrus-Kassim's clients cashed out large portions of their retirement accounts, apparently thinking they were re-investing the money. In reality, the money went to Jamrus-Kassim, who spent tens of thousands of dollars on a psychic hotline, clothes, jewelry and a trip to Mexico.

An investigation by the Washington insurance commissioner's Special Investigations Unit led to her arrest in March

And Bankers Life and Casualty, one of the companies that Jamrus-Kassim worked for, agreed last month to repay the money that Jamrus-Kassim stole

Update: As it turned out, sentencing was continued until Dec. 9 after Jamrus-Kassim demanded a new attorney.
McQueen v. Echelon General Insurance Co. [2011] O.J. No. 4563 (Ont CA)

McQueen v. Echelon General Insurance Co. [2011] O.J. No. 4563 (Ont CA)

Appeal by the insurer from an award of accident benefits and damages for mental distress.

At trial, the plaintiff sought housekeeping, transportation, costs of medical assessments and damages for bad faith and mental distress.

The insurer made three major arguments on the issue of damages for mental distress:

1. That there was procedural unfairness based on the trial judge’s
consideration of conduct unrelated to rejected claims for statutory
accident benefits;

2. That merely denying benefits does mean that there was bad faith; and

3. That the trial judge lacked jurisdiction to make an award for mental

The trial judge quickly dismissed the initial two arguments by concluding that the plaintiff was seeking to recover damages for more than the SABS benefits and that this was not a case where the insured simply denied benefits.

In regards to the allegation that there was merely a denial of benefits the appeal judge agreed with the trial judge on the following points:

• The insurer had a duty to act in good faith in all its dealings with the
insured and had an additional duty not to inflict unnecessary mental
distress. Fidler v. Sun Life Assurance Co. Ltd. 2006 2 SCR 3 (Fidler);

• That the insurer repeatedly refused to provide benefits noting that they
were not “reasonable and necessary”, but never provided and reasons why
they were not reasonable and necessary;

• That damages were warranted because benefits were denied contrary to
medical recommendations;

• That the insurer took an adversarial approach to the plaintiff in the

• That the one object of the insurance contract was to secure the plaintiff’s
peace of mind and that it was within the reasonable contemplation of the
parties that breach of peace of mind promise would bring about mental
distress; and

• That the plaintiff’s mental distress was palpable and accepted her evidence
that the change in her emotional and psychological conduct was the result
of her relationship with the insurer.

In regards to the jurisdiction argument, the insurer argued that the plaintiff was not a party to the insurance contract since it was her husband’s policy, and therefore, she was not entitled to claim for damages for mental distress.

It was further argued that Fider was distinguishable because Fidler dealt with LTD benefits not SABS benefits and that consequently, peace of mind cannot have been a contemplated term.

The appeal judge held that the reasoning in Fidler applies to an insured person under an automobile policy, whether the person is the named party or not.

“Mental distress to anyone insured under the policy upon breach would
have been within the reasonable contemplation of the insurer and the
insured and, thus, damages are recoverable pursuant to the basic
principle of compensatory damages.”


“People purchase motor vehicle policies to protect themselves from
financial and emotional stress and insecurity. An object of such
contracts is to secure a psychological benefit that brought the prospect
of mental distress upon breach within the reasonable contemplation of
the parties at the time the contract was made.”

In the end, the appeal judge affirmed all aspects of the trial judge’s decision only modifying the total awarded under the transportation head of damages as the trial judge provided inadequate reasons for the amount.

- Alison McBurney
Are insurers looking at your Facebook page?

Are insurers looking at your Facebook page?

There's an interesting article in Insurance & Technology, detailing the ways in which insurers could use -- and in some cases, are starting to use -- the information you post on your social media sites.
"When placed in public areas of users' profiles, these photos -- not to mention location information and personal statements in status updates -- represent data insurers can potentially use for claims and underwriting purposes,"
writes I&T's Nathan Golia, citing an October report from consulting firm Celent.

In a summary of the report, ABA Banking Journal called social media "a huge marketing and engagement potential for insurers," adding that:
"Most insurers are currently involved in only defensive actions. Celent expects that over the next three years, companies familiar with social media will being to apply social data to their buisinesses," and looking for vendors to help them capture, store and analyze social media data.
Insurance Networking News also reports that:
Celent predicts that social data will be incorporated into core underwriting and claims processes over the next three years and become standard inputs into risk evaluation and settlement activities."
In other words, your insurer may not be reading your Facebook profile or Tweets yet. But it may be soon.
Tacoma landlords charged with insurance fraud

Tacoma landlords charged with insurance fraud

A Pierce County couple and an acquaintance of theirs have each been charged with one felony count of insurance fraud.

William Harold Dummitt and Carole A Dummitt-Dombrowski rent out a cottage behind their home in Tacoma. On Nov. 25, 2010, the cottage had a water leak. The Dummitts submitted a claim to their insurer, USAA.

But they allegedly inflated their loss by claiming they’d been getting more rent from the cottage than they did – and to try to prove that by forging a renter’s signature on a false rental agreement.

Their acquaintance, Philip R. Burgess, told an investigator that he’d moved into the cottage on Dec. 1, 2010 and had to move out because of the sudden leak. But when the leak actually happened – Nov. 25, 2010 – Burgess was actually living in Portland, Ore.

Arraignment is scheduled for Nov. 18.

Update: (Feb. 1, 2012): William and Carole Dummitt each pleaded guilty to one count of false claims or proof in an insurance claim. Both were ordered to pay $1,200 in costs and assessments, and were each sentenced to 3 days in jail, which was converted to 24 hours of community service.
Sheikh v. Pinheiro 2011 ONSC 6143

Sheikh v. Pinheiro 2011 ONSC 6143

We thank M. Edward Key of O’Donnell, Robertson & Sanfilippo for this contribution to our blog.

The plaintiff was going westbound in her vehicle and the defendant taxi driver was travelling northbound in his taxi. They collided at an intersection. The defendant taxi then went on to collide with a southbound vehicle. That southbound vehicle did not collide with the plaintiff’s vehicle.

None of the drivers appeared to be hurt. They all went to the same Collision Reporting Center and filled out very detailed collision reports. There was no question who was driving what vehicle.

On the second anniversary of the collision, the plaintiff brought an action against the driver of the southbound vehicle, believing that he was the taxi driver. Essentially, the plaintiff got the other two drivers confused.
Two years after that (i.e. four years after the collision), the plaintiff commenced a separate action against the real taxi driver after realizing the mistake.

The taxi driver brought a motion for summary judgment on the basis that the action was limitation barred.

The plaintiff argued that there was a genuine issue regarding when the plaintiff knew or ought to have known the true identity of the driver that hit her vehicle. The motion judge made short work of that argument. In particular, for strategic reasons, the plaintiff did not swear an affidavit regarding the state of her personal knowledge of the issues, and the motion materials only included affidavits from their lawyers. The judge determined that the information was readily available in the form of the Self Collision Reports.

Alternatively, the plaintiff argued that there was a genuine issue for trial on the basis that she could not "discover" that her injuries were likely to satisfy the Insurance Act threshold until 2 years before she started the second action.
The motions judge rejected the plaintiff's argument. The trial judge considered that the medical evidence was clear that it was "reasonably discoverable" that the plaintiff's injuries met the threshold more than two years before the second action was commenced.

The motion judge looked not only at medical reports, but also relied on the fact that the first Statement of Claim (issued exactly 2 years after the accident) alleged that she sustained "serious and permanent injuries." The motion judge stated at paragraph 47 of his reasons that, "While this action was mistakenly directed against the wrong defendant, this assertion by the plaintiff in the Statement of Claim is akin to an admission that, by at least that time, if not earlier, the plaintiff viewed her injuries from the accident as serious and permanent, and that they had thereby discovered their potential cause of action."
Statutory Duty of Care

Statutory Duty of Care

Morsi v. Femer Paving Ltd. [2011] O.J. No. 3960

This is an appeal from a trial decision that held York Region and Femer Paving Ltd each 25 % liable for a single car motor vehicle accident. The deceased was driving in excess of the speed limit, ignoring speed and construction signs and lost control of his vehicle when the road surface changed from fresh pavement to gravel.

The trial judge held that the plaintiff was 50% to blame for the accident, leaving the defendants with the other 50%.

York Region and Femer Paving appealed the decision.

York Region’s main submission was that after the trial Judge correctly stated the main issue and the test for resolving the issue …

“Whether at the material time Major Mackenzie drive was in a state of repair that was reasonable in the circumstances such that users of the road, exercising ordinary care, could travel upon it safely.”

… that he did not apply the test to the facts of the case.

“The evidence of Detective Stock and the Varicom tests as well as the evidence of Constable Herbert and the various engineering experts establishes that if Mark Morsi had operated his vehicle at the posted speed or even a speed modestly above it, he would have been able to successfully negotiate the transition area.”

The Ontario Court of Appeal found the driver to be reckless having accelerated to 117 km/h through a long curve and straightaway and ignoring two 60km/h speed signs, a reverse curve sign, a 40 km/h advisory sign and two construction signs. This was not a driver exercising ordinary care.

The appeal was allowed and the action by the driver’s family was dismissed.

- Alison McBurney
Tired of being suprised by health rate changes?

Tired of being suprised by health rate changes?

Now you can sign up to get notified by e-mail whenever your health plan wants to make a rate change - and when we've made our decision.

A newly enhanced website, built with grant funds from Affordable Care Act, allows you to search rate requests for individual and small employer health plans, sign up to get an e-mail when your health plan wants a change, and make a public comment about requests still under review.

Eight requests are pending and eight decisions have been made - see the full details for yourself.
Agent pleads guilty, taken into custody

Agent pleads guilty, taken into custody

Former Washington insurance agent Jasmine Jamrus-Kassim pleaded guilty this morning to 10 counts of theft for stealing more than $1 million in retirement funds from elderly insurance clients.

Jamrus-Kassim, who had been free on bond, was immediately taken into custody.

From 2007 to late 2009, several of Jamrus-Kassim's clients cashed out large portions of their retirement accounts, apparently thinking they were re-investing the money. In reality, the money went to Jamrus-Kassim, who spent tens of thousands of dollars on a psychic hotline, clothes, jewelry and a trip to Mexico.

An investigation by the Washington insurance commissioner's Special Investigations Unit led to her arrest in March.

And Bankers Life and Casualty, one of the companies that Jamrus-Kassim worked for, agreed last month to repay the money that Jamrus-Kassim stole

Sentencing in King County Superior Court is slated for Nov. 18.
Children's open enrollment ends Monday, Oct. 31

Children's open enrollment ends Monday, Oct. 31

If you need an individual health plan for your child or want to add them to your insurance, you have until Monday, Oct. 31. After that, unless you meet certain requirements, you'll have to wait until March 15-April 30, 2012.

There are some exceptions that allow children to be enrolled anytime during the year. Parents must apply for their child within 31 days of the following events if either they or their child:
  • No longer qualify for a state program.
  • Lose coverage due to a divorce.
  • Lose employer-sponsored coverage (including COBRA).
  • Move and their plan is not available where they live.
  • Also, parents or guardians can apply year-round for individual coverage within 60 days of birth, adoption, or placement of a child for adoption.
New Minor Injury Guideline

New Minor Injury Guideline

The new Statutory Accident Benefits Schedule (SABS) came into effect September 1, 2010. Among the key amendments, there has been a reduction of medical and rehabilitation benefits from $100,000.00 to $50,000.00. In some cases, this will be further reduced to $3,500.00 under the new Minor Injury Guideline (MIG).

The MIG applies to accidents that occurred on or after September 1, 2010, and replaces the Pre Authorized Framework for Grade I and II whiplash associated disorders. Section 268.3 of the Insurance Act requires that the MIG be considered in any determination involving the interpretation of the SABS.

An insured person’s impairment comes within this Guideline if the impairment is predominantly a minor injury. “Minor injury” is defined in the new SABS as a “sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and any clinically associate sequelae”. Each of these conditions are further defined to specify the severity of each to move it out of the “minor injury” category. For example, “whiplash associated disorder” is defined as “a whiplash injury that does not exhibit objective, demonstrative, definable and clinically relevant neurological signs, and does not exhibit a fracture in or dislocation of the spine”.

The objectives of the MIG are to speed access to rehabilitation for persons who sustain minor injuries in auto accidents, improve utilization of health care resources, provide certainty around cost and payment for insurers and regulated health professionals, and be more inclusive in providing immediate access to treatment without insurer approval for those persons with minor injuries.

Many accident victims may now find their benefits reduced to $3,500.00 and if they do not have a tort claim, they may have little alternative for additional medical coverage. The Financial Services Commission of Ontario expects the MIG to capture 30%-40% of accident claims.

Section 18(2) provides for an exclusion from MIG if the insured person’s health practitioner determines and provides compelling evidence that the insured person has a pre-existing medical condition that will prevent the insured person from achieving maximal recovery from the minor injury if subject to the $3,500.00 limit. This exception raises the question of what the courts will consider to be “compelling evidence”.

- Kristen Dearlove, Student-at-Law
Does insurance cover space junk crashing to earth?

Does insurance cover space junk crashing to earth?

If pieces of a satellite crash on your home or car -- or on you -- does insurance cover that?

Yes, according to the Insurance Information Institute:

"Damages caused by falling objects are generally covered under standard auto, business, homeowners, and life insurance policies..."

the industry group says. It also noted, however, that the odds of being struck by space debris are extremely low.
Municipality attempts to exert rights to shoreline road after discovering a 150 year old By-law

Municipality attempts to exert rights to shoreline road after discovering a 150 year old By-law

Meaford (Municipality) v. Grist [2011] O.J. No. 4188

This is an interesting case regarding an 1854 By-law that had been found in 2004, which purported to create a municipal/public road along the shore of Georgian Bay.

Some of the named defendants brought two summary judgment motions claiming that there are no genuine issues requiring a trial. The action is disputed by the defendants because the road would take away approximately 66 feet of their shorelines lands.

The road had not been registered on title until 2007 after the Municipality discovered the By-law.

The Municipality’s argument, among other things included the doctrine of dedication and acceptance.

Justice Daley set out the test for the common law doctrine of dedication and acceptance/ long user:

Dedication depends on the intention of the donor and also acceptance of
the road by public authority.

There are three conditions:

1. An owner of the land on which the road is situated had formed the
intention to dedicate the land to the public road or highway;

2. The intention was carried out by the road being thrown open to the
public; and

3. The road was accepted by the public.

Dedication can occur by usurpation and long enjoyment.

Where members of the public continually use the road over a long period
of time, dedication may be inferred.

Justice Daley stated that the plaintiff bears the onus “upon a preponderance of probability to demonstrate that the conditions necessary for the establishment of dedication and acceptance were all present”. He then refers to the Reed v. Town of Lincoln [1973] decision where the “cogency of the evidence required to satisfy the burden … may vary … according to the nature of the issue with respect to which the burden must be met.”

Using this ruling, he bolsters the onus requiring the municipality to “satisfy the onus by a clear and substantial preponderance of evidence that the property owners have lost the title to a portion of their property which now constitutes a public road”.

Meaford argued that the public highway existed prior to the by-law. It was held that there was no genuine issue for trial; the plaintiff had not offered any physical/documentary evidence. Even if there had been a road, the time from the initial Crown grant in 1840 to the date of the by-law in 1854, is not enough time to find a “long user”.

It was further held that there was no dedication and acceptance in modern day, for many reasons, including:

1. The municipality graded the road approximately twice a year –
otherwise had no involvement in the upkeep.

2. The municipality entered into a maintenance agreement with the
cottage owners association.

3. In 1986, part of the road had washed away and the municipality had
not restored the road. In fact, the owner of the property had a
different portion of his property, severed, re-zoned and built a
private driveway (no dispute that this “inland” driveway was a
private road).

4. The “inland” driveway was maintained pursuant to the maintenance

5. The defendants were bona fide purchasers for value and the cottages
built on the lots comply with zoning by-laws in regards to set back
from the water’s edge and not from the disputed road.

6. There was no evidence of municipal funds or labour to build, maintain
or restore the road.

7. The municipality, in this action, was only trying to lay claim to a
very small potion of the road that the By-law purported to create.

Justice Daley held that there was no evidence of actual or implied dedication or acceptance and was held not to give rise to any issues requiring a trial.

He went further to state that the municipality had slept on their rights for over 150years and applied the doctrine of laches and acquiescence and that “quite apart from all of the other reasons expressed (in the 192 paragraphs), it would be unjust to grant Meaford’s claim”.

This post was prepared by our Associate Alison McBurney.

Is the weather really getting worse? Insurer's data suggests yes

Munich Re, a major reinsurance company, this summer released a very interesting report on natural disasters, and the data suggests that, as one newspaper columnist put it, it's not your imagination. The weather really is getting worse. Click on that link, and take a look at the chart you'll see.
Munich Re's full report is online and entitled the 2011 Half-Year Natural Catastrophe Review. There's also a 47-minute webinar on the topic posted online.
Red cars, insurance and speeding tickets

Red cars, insurance and speeding tickets

There's an urban myth out there that holds that the color of a car affects your insurance rate. The rumor is so pervasive that some insurers mention it on their corporate websites.

It's not true. In our experience, the color of a car has nothing to do with how much you pay for auto coverage. We review auto insurance rates (among many others) here in Washington state, and we can't recall ever seeing an auto insurance rate schedule that takes color into account. Insurers do often raise rates for high performance vehicles, which may be more likely to come in red, but color itself is meaningless in determining rates.

(Here are the sorts of factors insurers take into account, including things that might surprise you -- like your credit score.)

While we're on the topic, how about the widespread belief that red cars get more speeding tickets? Snopes.com, the rumor-busting website, says that doesn't seem to be true, either:

"...It does not appear that red cars get cited for speeding more often than they statistically should."

Don't get fooled by official-looking health insurance website

The federal Centers for Medicare and Medicaid Services (CMS) is warning consumers about a site that "has the appearance of being an official government website" but isn't. The website is http://preexistingconditioninsuranceplan.com/. Here's a partial screenshot:

From CMS:
This new website...is not maintained by any government programs and consumers are strongly urged not to submit any personal information requested by this website under the assumption that it is a government website.
The site includes a small disclaimer acknowledging that it's not a government-run site, but is:
"rather (a) solicitation by a licensed insurance entity/agent/broker seeking to assist and enroll individuals in the PCIP program or other insurance products."
Pre-existing Condition Insurance Plans -- PCIPs for short -- were created under federal health care reform. They're a good option for people who have a problem getting insurance due to a pre-existing medical condition. Here's our official, real website that explains more about Washington's PCIP program.

Not in Washington? Here's the official federal PCIP site.
Premera refiles rate request

Premera refiles rate request

Premera Blue Cross has refiled a rate change for its individual health plans - this time seeking a 4.7 percent increase. We disapproved it's earlier request for a 3.1 percent increase in September. We have 60 days to review the request and make a decision.

The new rate, if approved would take effect on Jan. 1, 2012 and would impact approximately 3,874 people.

You can view the entire rate filing, a summary of key date supplied by Premera and why we turned down their last request at www.insurance.wa.gov/health-rates.shtml
The Importance of Causation

The Importance of Causation

In Lancaster (Litigation Guardian of) v. Santos, [2011] O.J. No. 3706, the County of Dufferin was added as a third party in an action arising out of a MVA on November 21, 2001 involving a fully-loaded pickup truck being driven by Mr. Santos and the plaintiff’s vehicle.

The transport had tipped over when coming around a curve and slid into oncoming traffic. It was alleged that but for the County’s failure to properly sign the portion of the road in issue, Mr. Santos would have been aware of the hazardous road condition and would have reduced his speed such that he could have managed the curve.

Lemon J., found the cause of the accident, on a balance of probabilities, to be the shifting of the truck’s load as a result of it not being properly secured. Mr. Santos had testified that the signs which existed provided some warning and he reacted to it by slowing down. As a result of this testimony, the road conditions and signage were not found to be the cause.

Lemon J., went on to determine whether the County could have been liable had there been causation. The plaintiff argued that when the County breached the Manual of Uniform Traffic Control Devices (MUTCD) by not properly signing the road, it breached its duty of care.

Lemon J., stated: “while I agree that this sign did not meet the standard set by the MUTCD, and that other drivers in other circumstances might have been mislead, that was not the case for Mr. Santos…The sign as posted was doing its job”.

This case is significant in that that court confirms an obvious yet often overlooked principle – If there is a breach of the duty of care, it must have contributed to or caused the MVA. Municipalities should keep in mind that although they perhaps made a mistake at some point in time, it must be considered whether this mistake caused or contributed to the MVA.

Thanks to our articling student, Kristen Dearlove, for this post.
Insurance company not paying a life insurance claim? Here's what you can do...

Insurance company not paying a life insurance claim? Here's what you can do...

Generally, insurance companies can only deny life insurance proceeds within the first two policy years for two reasons. This is called the "contestability period." After the two years, the insurer generally cannot contest the benefits.

The two reasons are if the death of the insured:

1. Is due to suicide (this does not apply to group life policies).
2. Didn't tell the truth on the application for coverage. This is called the “contestability period.” After the two years, the insurance company cannot contest the benefits.

(Bonus round: Here's a link to our ever-popular post on "How to find old life insurance policies.")

If you’re the beneficiary of a life insurance policy and you think the insurer is wrongly denying your claim for benefits, file a complaint with our office, if you live in Washington state. (If you don't, here's a handy map showing how to contact your own state insurance regulator.) We'll look into the matter and see if we can help you resolve the problem. File a complaint online or give us a call at 1-800-562-6900.
Insurance agent who sold fake policies sentenced to more than two years in prison

Insurance agent who sold fake policies sentenced to more than two years in prison

An insurance agent who sold hundreds of thousands of dollars in fake business-insurance policies has been sentenced to more than two years in prison.

Brenda MacLaren-Beattie, 68, of Des Moines, Wash., was sentenced Thursday in King County Superior Court to 26 months in prison. She was immediately taken into custody. She was also ordered to pay back $532,659 in restitution.

“I’m very pleased that the court took this as seriously as we did,” said Insurance Commissioner Mike Kreidler. “This agent sold fictitious coverage to dozens of medical offices in Washington and Oregon, often for years. People thought they had coverage and they didn’t.”

An investigation by Kreidler’s office found that from late 2001 through 2009, MacLaren-Beattie issued fake insurance to 25 oral surgeons in Washington and 16 in Oregon. During that time, she is believed to have collected more than $532,000 in premiums for fictitious insurance policies, often issuing counterfeit certificates of insurance to doctors and clinics. Her insurance license expired in 2009. (And here's the cease-and-desist order issued at the time.)

In a few cases – a lost camera, some water damage – she paid out small insurance claims herself. One of her clients became suspicious after a claim check was issued by MacLaren-Beattie, rather than from an insurance company.

The fictitious policies were for business owners’ general liability insurance, which typically covers things like slip-and-fall accidents, employee theft, and damage to rented property.

MacLaren-Beattie pleaded guilty in August to eight counts of first-degree theft, a felony. On Thursday, she received eight 26-month sentences, which will run concurrently.
How to avoid buying a flood-damaged car

How to avoid buying a flood-damaged car

With hurricane and storm season winding down, an insurance industry organization is warning about the likelihood that flood-damaged vehicles will be sold to salvage dealers, their flood-damage history illegally hidden, and sold as normal cars in the used-car market.

An anti-fraud group, the National Insurance Crime Bureau, has created an online tool where you can look up -- for free -- a car's vehicle identification number and see if it's been declared a salvage vehicle by an insurer. (The VIN number is typically visible through the front windshield, where the windshield meets the car's hood. It's usually a long combination of numbers and letters.)

Also, the Insurance Information Institute suggests being on the lookout for several warning signs that a car may have been flooded:

 Mildew, debris and silt in places where it wouldn't normally be found, such as under the carpeting in the trunk, or around the engine compartment

 Rust on screws and other metal parts

 Waterstains or faded upholstery; discoloration of seatbelts and door panels

 Dampness in the floor and carpeting; moisture on the inside of the instrument panel

 A moldy odor or an intense smell of Lysol or deodorizer; this is a tactic frequently used by dealers to cover up an odor problem

If you suspect that your local car dealer is committing fraud by knowingly selling flooded cars as regular used cars, the III suggests contacting your insurance company, local law enforcement agency or the NICB at 800-TEL-NICB.
Court of Appeal Comments on s. 132 of the Insurance Act

Court of Appeal Comments on s. 132 of the Insurance Act

The Court of Appeal recently commented on s. 132 of the Insurance Act. Section 132 provides that a person who obtains a judgment against an insured person which has not been satisfied may recover that amount from the insured’s insurer.

In Walker v. Sovereign General Insurance Co., [2011] O.J. No. 4106 (C.A.), the Walkers obtained a judgment against Sun Shelters Industries Inc. for damages sustained in a parking lot slip and fall. Sun Shelters went bankrupt and could not pay the judgment, so the Walkers brought an action under s. 132 against Sun Shelters’ insurance company, Sovereign. Sovereign’s position was that it did not receive proper notice as required under the CGL policy and as a result was not required to defend the action or indemnify Sun Shelters or the Walkers.

The Court of Appeal held that notice of a claim can be given either by the insured or by a person on behalf of the insured. In this case, notice was given to Sovereign by a co-defendant. The Court noted that if notice is given by someone other than the insured, the person should have sufficient proximity to give adequate details of the claim:

36 Given its purpose and importance, if the notice is to be given for an insured instead of by the insured itself, the person giving it should have sufficient proximity to the claim to have knowledge of the information required by s. 3(a). Emshih was just such a person. It owned the property where the accident occurred; it was a defendant in the original action; and it cross-claimed against Sovereign's insured. In giving notice to Sovereign, Emshih was giving notice for Sun Shelters as contemplated by s. 3(a) of the policy.

Sovereign had actual notice of the claim and made a conscious decision not to defend. If the insurer had no knowledge of the claim, no opportunity to investigate or negotiate a settlement, it may be that the decision would be different.

- Tara
Scammed seniors will be repaid more than $1 million

Scammed seniors will be repaid more than $1 million

Retirees who lost more than $1 million to an unscrupulous insurance agent will be repaid, under an agreement reached between the insurance company and state Insurance Commissioner Mike Kreidler.

Bankers Life and Casualty, one of the companies that the independent agent worked for, has agreed to replace the money allegedly stolen by the agent.

An investigation by Kreidler’s office found that several of Jasmine Jamrus-Kassim’s clients repeatedly cashed out large portions of their annuities with Banker’s Life and Casualty from late 2007 to late 2009. The money was then pocketed by Kassim.

Jamrus-Kassim, of Kent, was arrested in March 2011 and charged with 21 counts of first-degree theft. Her trial is pending in King County Superior Court.

“I commend Bankers Life for stepping up and making these victims whole, to the extent possible,” said Kreidler. “I’m deeply saddened that one victim, stripped of his life’s savings, has already passed away. In his case, restitution will go to his estate.”

The victims, who ranged from age 74 to 90, typically made out their checks to “S.A. Saad” and gave them to Kassim. Several said they believed that S.A. Saad was an insurance company official. They thought their money was being reinvested.

In reality, Kassim has two daughters, both with the initials and surname “S.A. Saad.” Most of the money was deposited briefly in the girls’ accounts, then moved to Kassim’s personal credit union account. Kassim’s financial records show thousands of dollars spent on clothes, jewelry, and a trip to Mexico. They also show large payments to online psychic advisors, including $20,000 in charges from one psychic website in one month.

The victims live in Bellevue, Renton and Seattle. The payment amounts are:

• $512,112

• $488,071

• $116,070

• $65,321

• And $929

Bankers has also agreed to pay interest.
Class-action settlement covers hundreds of thousands of insurance customers

Class-action settlement covers hundreds of thousands of insurance customers

Hundreds of thousands of people who were led to expect more interest than they got from annuities are eligible for a multi-million dollar class-action settlement – if they sign up on time.

“Consumers across the country were misled, and I’m very glad to see this case finally resolved with restitution,” said Insurance Commissioner Mike Kreidler. “I urge anyone who qualifies to sign up for their share of the settlement.”

The settlement involves Northern Life Insurance Company’s marketing of tax-sheltered fixed annuities, primarily to teachers, starting in 1995. (The company, which was based in Seattle, merged with Minnesota-based Reliastar Life Insurance Co. in 2002.)

The annuity documents, Kreidler said, misrepresented to consumers the way that interest would be calculated over the life of the annuities. Instead, Northern Life paid a high interest rate only in the first year of the contract, reducing the rate during all the remaining years.

Under the settlement, Northern Life has agreed to pay $29 to $40 for each $10,000 in value of a person’s annuity. The settlement provides up to $31 million for the payments. A King County Superior Court judge recently approved the mediated settlement, in which Northern Life did not admit wrongdoing.

Northern Life has notified 406,000 account holders that they are potentially affected by the settlement. An estimated 20,000 of those people are in Washington state.

“People are naturally skeptical of mailings,” said Kreidler, “but don’t just toss this one in the trash.”
The one-page claim form, also available at http://www.curtissettlement.com/, must be mailed back on or before Oct. 17, 2011. (It can also be scanned and emailed by that date.) Under penalty of perjury, signers must certify that they owned a fixed annuity issued by Northern Life sometime between Jan. 1, 1995 and the present time.

Typical payments are likely to range from $60 to $80, although some will be significantly larger.
The claimants were represented by private attorneys in the 10-year court case, which involved more than 1 million pages of documents.

Kreidler’s office investigated the issue and filed an amicus brief in the case, saying that consumers had been substantially harmed by misleading marketing.
Turned down for life insurance? Here's what you can do...

Turned down for life insurance? Here's what you can do...

If you apply for life insurance and get rejected, it's usually due to a specific health condition. Here’s what you can do to appeal their decision:

1. Ask the insurer to tell you, in writing, what specific condition disqualified you for coverage and where they obtained that information.

2. Review their information for accuracy. If you find any discrepancies, contact the doctor and ask him or her to correct the information. If the information is accurate, discuss the condition with your doctor. If the doctor thinks the condition is not a major health risk, ask him or her if they’d be willing to write a letter on your behalf to the insurer.

Other options:

• Asking the company if they would consider issuing coverage at what's called a "rated premium."

• Applying to other companies. Just because one company doesn’t want to take on your risk doesn’t mean another one won’t. Each company determines which risk they are willing to take. (Brokers can help with this.)

• If ultimately, you don’t qualify for coverage through a standard life insurance company, consider applying for coverage through a company that offers covereage specifically for high-risk people. You’d pay more, but at least you'd have coverage.
Job openings: Actuaries, actuarial analyst, market conduct examiner

Job openings: Actuaries, actuarial analyst, market conduct examiner

  • Actuaries: Due to retirements, we have two openings for actuaries now, helping with financial examinations, analysis and licensing of life insurers or health insurers. Other typical duties include reviewing rates, equity-indexed annuities, etc. For details on these jobs, including salary and benefits, please see this job listing for both acturarial jobs.

  • Actuarial analyst: We're also looking for an actuarial analyst to fill a vacancy created when a staffer shifted over to a federally-funded project that we're working on (part of health care reform). Duties include reviewing actuarial calculations submitted by health insurance carriers to determine if rate requests are justified. For specifics, here's that job listing. The deadline for applying is 4:59 p.m. on Thursday, Oct. 6.

  • Market Conduct Examiner: We also have a vacancy in our Seattle office for a market conduct examiner. This job includes reviewing and analyzing company records and procedures. Here's a detailed job listing, including other duties, salary, etc. The deadline for applying is 5 p.m. on Friday, Oct. 7, 2011.
Home warranty company ordered to stop selling illegal coverage

Home warranty company ordered to stop selling illegal coverage

A Florida company, its principals and subsidiaries have been ordered to stop selling unauthorized home warranties in Washington state.

Insurance Commissioner Mike Kreidler has ordered International Warranty Administration Services, Inc. and related entities to stop selling service contracts in Washington. The company and its subsidiaries are believed to have sold dozens of unauthorized service contracts in the state, but are not licensed to solicit insurance here.

Kreidler's order also includes The Metropolitan Benefit Group, Inc., doing business as HomeChoice Plans, HomeChoice Household Service Plans, Choice Plans LLC, and "ChoicePlans a division of the IWASI Group." Also named were International Warranty Administration Services' principals Kacey L. Crouch, also known as Kasey L. Crouch, and Mark Lowenstein.

See the link above for the full text of the order.
Insurance agents and brokers fined for violations

Insurance agents and brokers fined for violations

Insurance Commissioner Mike Kreidler has ordered fines and other disciplinary action for more than a dozen insurance agents and brokers.

Violations include failing to properly disclose fees, using a false Social Security number and wrongly disclosing a customer’s private health information.

“I should point out that these cases are only a tiny fraction of the more than 118,000 agents and brokers licensed to do business here in Washington,” said Kreidler.

Any Washingtonian with a complaint against an insurer, agent or broker can contact Kreidler’s office at 1-800-562-6900 or file a complaint online at http://www.insurance.wa.gov/.

Any fines collected do not go to the agency. They are deposited in the state’s general fund to pay for other state services.

Fines and disciplinary actions from early June through early September include:

■HSBC Securities (USA) Inc., New York, NY: Fined $7,000 for violations including failing to report administrative actions taken against it.

■Conover Insurance Inc., Yakima, Wash.: Fined $6,000 for providing false information on 12 license renewal applications.

■Kimberly A. Kelly, doing business as Peoples Insurance Agency, Inc., Renton, Wash.: Fined $250 for using a fee disclosure form that didn’t comply with state law.

■Kimberly D. Brookey, Kent, Wash.: Fined $250 for using a fee disclosure form that didn’t comply with state law.

■Ryan J. Graczyk, Spokane Valley, Wash.: Fined $500 for incorrectly and incompletely answering questions on a disclosure form to a consumer.

■Warren M. King, doing business as Exact Financial Group, Inc., Renton, Wash.: Fined $500 for violations including submitting a life insurance application with inaccurate information.

■Swiss Valley Agency, Inc., doing business as North Town Insurance, Spokane, Wash.: Fined $250 for using a fee disclosure form that didn’t comply with state law.

■Rick L. Clatfelter, Chandler, Ariz.: License not renewed for making misleading statements on an insurance application.

■Lucky Bail Bonds, Inc. and Eric Arps, Bellingham, Wash.: Fined $5,500 for violations including misrepresenting to the court that he personally completed and signed certain documents.

■Robert J. Mills Jr., Wilton, CT: Fined $5,000 and ordered to stop selling insurance in Washington without a license.

■Colleen S. Schmertz, Bellingham, Wash.: Fined $500 for issuing bail bonds without a proper insurance license.

■Maria E. Bejines, Monroe, Wash.: License revoked for violations including using a false Social Security number on her insurance license application.

■Phyllis N. Golden, Seattle, Wash.: Fined $250 for providing false information about continuing education courses.

■Tiffany Lynn Lewis, Irving, Tx.: License revoked due to a felony conviction for stealing money from a client.

■Northpoint Escrow & Title, LLC, Bellevue, Wash: Fined $500 for improperly sponsoring a promotional event.

■James Timothy Shelnut, Augusta, Ga.: License revoked for failing to report administrative actions in other states, including violations of Georgia’s Ethics in Government Act.

■Ticor Title Co., Renton, Wash.: Fined $1,500 for improperly sponsoring a promotional event and offering to refund class tuition if attendees failed the quiz at the end of the class.

Orders and specific details about each of these cases are posted online at http://www.insurance.wa.gov/orders/enforcement.asp.

Note: In some cases, the fines were larger, but a portion was suspended on the condition that the companies follow compliance plans to remedy the problems. The fines listed above are what’s actually being paid.
Insurers fined for violations

Insurers fined for violations

Insurance Commissioner Mike Kreidler has fined insurance companies nearly $1 million this year for violating Washington insurance laws. Violations included charging unapproved rates, improper advertising, and failing to offer health coverage to children.
The fines collected do not go to the agency. They are deposited in the state’s general fund to pay for other state services.
Any Washingtonian with a complaint against an insurer, agent or broker can contact the office at 1-800-562-6900 or file a complaint online at http://www.insurance.wa.gov/.

Fines and other disciplinary actions against insurers from June to September include:
■UNUM Life Insurance Co., Portland, Me.: Fined $75,000 for selling long term care coverage using unapproved policies.

■Allstate Insurance Co., Northbrook, Ill: Fined $50,000 for issuing policies using unfiled and unapproved rates.

■UnitedHealthCare, Hartford, Conn.: Fined $26,000 for sending people wishing to appeal the insurer’s decisions to the wrong entity.

■Arch Insurance Co., Kansas City, Mo.: Fined $20,000 for violations including failing to keep adequate accounts and records.

■Chicago Title Insurance Co., Omaha, Neb.: Fined $10,000 for improperly advertising with producers of title insurance business.

■Lifewise Health Plan of Washington, Mountlake Terrace, Wash.: Fined $10,000 for failing to offer coverage to children in certain cases.

■Metropolitan Life Insurance, New York, NY: Fined $10,000 for failing to calculate benefit amounts in accordance with Washington law.

■Victoria Fire & Casualty Co., Cleveland, Ohio: Fined $5,000 for failing to adequately respond to inquiries.

■Fidelity National Title Insurance Co. (Santa Barbara, Calif.) Chicago Title Insurance Co. and Commonwealth Land Title Insurance Co. (both of Omaha, Neb.): Ordered to stop offering discounts to producers of title insurance business.

Orders and details about each of these cases are posted online at http://www.insurance.wa.gov/orders/enforcement.asp.

Note: In some cases, the fines were larger, but a portion was suspended on the condition that the companies follow compliance plans to remedy the problems. The fines listed above are what’s actually being paid.
Information contained in written statement insured gave to insurer – is the insured required to provide this information at examination for discovery?

Information contained in written statement insured gave to insurer – is the insured required to provide this information at examination for discovery?

In Sangaralingam v. Sinnathurai, [2011] ONSC 1618, when examining the defendant for discovery, counsel for the plaintiff requested that the defendant provide information contained in the written statement he gave to his insurer following the motor vehicle accident. Defendant’s counsel refused to provide the statement or the contained information on the grounds that it was protected by litigation privilege.

A motion was made to a master who ruled that the defendant was not required to provide the information in the statement on the basis that the defendant had already been examined for discovery at length and the plaintiff also received a copy of the statement the defendant provided to the police following the accident. Therefore, such questioning would be solely with respect to the credibility of the defendant.

The master’s decision was appealed. The motions judge required the defendant to answer the question. The motions judge relied on the principle that questions on discovery seeking the facts of a party’s case do not offend privilege even though the source of the facts is a document over which privilege is being asserted.

There was a further appeal to the Divisional Court. Justice Herman referred to the test for when litigation privilege should be set aside as provided by Justice Ducharme in Kennedy v. McKenzie, [2005] O.J. No. 2060: where “the materials being sought are relevant to the proof of an issue important to the outcome of the case and [that] there is no reasonable alternative form of evidence that can serve the same purpose”.

Upon application of this test to the case at hand, Justice Herman concluded that in the course of the examination for discovery, counsel for the plaintiff had the opportunity to ask questions of the defendant that were relevant to the material issues. The defendant was co-operative and was not withholding information. Therefore, there was an alternative means available to obtain the relevant information and as a result litigation privilege should not be set aside.

Also, with respect to whether the request was directed solely to the credibility of the defendant, Justice Herman stated that it was his opinion that the sole purpose of the question being asked was to find out what the defendant told his insurer and therefore was asked for the sole purpose of credibility.